The Recommendation to Use Monetary Policy to Stabilize the Economy

question 14

Multiple Choice

The recommendation to use monetary policy to stabilize the economy and use fiscal policy only when monetary policy is ineffective is consistent with _____ macroeconomics.

• A) classical
• B) Keynesian
• C) monetarist
• D) Great Moderation consensus

---

Definitions:

Average Variable Cost

The total variable expenses divided by the number of units produced, representing the variable cost per unit.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Profit-maximizing Firm

A business organization that focuses on making the highest possible profit by adjusting its production and pricing strategies.

Marginal Cost

The rise in overall expenses associated with the creation of an extra unit of a good or service.